Wednesday, November 6, 2013

The authors propose reforms that would encourage companies to establish rigorous compliance programs, certified by third-party auditors. Companies that maintain these "gold standard" compliance programs would be afforded the benefit of several FCA reforms:

establishing a graduated scale of damages depending on a company's degree of intent;

barring qui tam actions, with limited exceptions, in cases where the company previously disclosed substantially the same allegations to an appropriate governmental entity;

encouraging internal reporting by employees by providing for dismissal of qui tam actions filed by plaintiffs who failed to report internally at least 180 days prior to filing suit; and

eliminating mandatory or permissive exclusion and debarment for these companies.

To address other shortcomings in the FCA and its use, the authors also propose reforms that would apply to all individuals and entities subject to the FCA, including:

reducing the relator's share of government recoveries to provide substantial not excessive incentives for bringing fraud to light;

barring qui tam actions brought by present or former government employees arising from the person's government service;

requiring that essential elements of liability under the FCA be proven by clear and convincing evidence;

calibrating damages to the government's actual losses;

permitting statutory penalties only when no damages are awarded;

clarifying that the Wartime Suspension of Limitations Act tolls the limitations period only for criminal claims, not civil ones;

requiring the Justice Department to notify federal agencies of their obligations to preserve relevant documents upon receipt of a qui tam complaint; and

reforming the Justice Department's policy governing use of civil investigative demands, including by requiring that such demands be used only when necessary and when other less burdensome alternatives are not available.

Wisconsin stands to collect more than $20 million from settlements with companies whose alleged practices inflated the cost of prescription drugs bought by the state's Medicaid program.

McKesson Corp., one of the country's largest pharmaceutical distributors, has agreed to pay $13.9 million to settle a lawsuit that alleges the company fraudulently reported inflated drug prices to increase payments to pharmacies from the state's Medicaid program, Attorney General J.B. Van Hollen announced Tuesday.

First DataBank, a unit of the Hearst Corp. and a defendant in the lawsuit, agreed to give the state $276,881.25 in credits for its services as part of the settlement.

Separately, Wisconsin will receive more than $7.2 million as its share of a $1.2 billion settlement with Johnson & Johnson and its subsidiary, Janssen Pharmaceuticals, announced Monday. The settlement with the federal government and states stemmed from allegations that the company improperly marketed antipsychotic drugs.

The settlement with McKesson includes $11.6 million in restitution to the state's Medicaid program and $2.3 million for attorneys' fees and costs.

The lawsuit alleged that McKesson inflated the average wholesale prices for pharmaceuticals reported to First DataBank. The reported prices then were used to determine what the Medicaid program would pay for the drugs.

"By causing inflated drug prices to be reported and published and concealing that information, McKesson and First DataBank knew that the program would overpay for pharmaceuticals," Van Hollen said in a statement.

The state Department of Justice sued McKesson and First DataBank in October 2012. The lawsuit is separate from one filed in 2004 against dozens of pharmaceutical companies alleging a similar scheme to inflate drug prices. The lawsuit is pending in Dane County Circuit Court.

The U.S. Department of Justice and about two dozen states have filed similar lawsuits.

As of February, 10 defendants had settled with Wisconsin and agreed to pay a total of $17 million.

The settlements have been with smaller companies, and hundreds of millions of dollars could be at stake in the lawsuits.

The settlement with Johnson & Johnson and Janssen stemmed from allegations that Risperdal and Invega, two antipsychotic drugs, were promoted and marketed for uses not approved by the Food and Drug Administration.

The two companies also allegedly paid illegal kickbacks to health care professionals and pharmacies in nursing homes and other care facilities to induce them to promote or prescribe Risperdal in children, adolescents and the elderly, although it wasn't recommended for them.

Nurse Kelly Florentino, on screen, and Vianna Hurley, of Coventry, listen to testimony about Pentec, a company no longer allowed to offer in-home care in Rhode Island.

PROVIDENCE — The stories were different, yet in one way, they were alike. Each centered around people who were suffering from debilitating diseases and severe pain.

And in each, there was a specialized method of care that made the pain more bearable — until the state Department of Health told the unlicensed company that provided the in-home service to stop.

Testifying before the House Health, Education and Welfare Committee on Tuesday, Jason Scholle, of Narragansett, said the victim in his case was his mother, 59, and now going on 20 years living with multiple sclerosis.

She had benefited greatly from the service, he said, in which visiting nurses provided refills for the pain medication delivery pump implanted in her body. Without those visits, she had to be taken to the hospital for refills, and Scholle said that led to complications that have left her hospitalized and led doctors to remove the pump.

“It really stemmed from her not having help at home,” he said.

Vianna Hurley, 44, of Coventry, said she has had a medication delivery pump for five years and also benefited from the in-home service. But Hurley, who has chronic and acute pancreatitis, said she now has go to Boston for pump refills, typically about once every two weeks.

And Tracy Breton, a retired Providence Journal reporter, told the story of her husband, Doane Hulick, who died of lung cancer last fall but had also benefited from the visits by Pentec nurses to refill and recalibrate his pump.

“Last year, as my husband neared the end of his life, his best friend was his pain pump,” she said.

Breton’s husband died before the state told the company to stop the home visits, but it was Breton who publicized the situation in a Journal op-ed piece that ran on Aug. 25. And committee Chairman Joseph M. McNamara, D-Warwick, said it was that article that prompted an investigation into what led a company that was already operating in 28 states to decide it did not want to operate in Rhode Island.

In testimony at earlier hearings, Health Director Michael D. Fine has said the department was merely following through on an admittedly arduous licensing process that required Pentec to first obtain a certificate of need — meaning the company had to prove its service is needed, affordable and safe.

But Michael R. Abens, general manager of the Pennsylvania-based Pentec Inc., said his company sought a license only to continue helping five patients who had been directed to Pentec by their doctors, not because it made sense from a business perspective. And he described the experience as long and confrontational, so much so that in July, he withdrew the company’s application.

By then, it had already been 10 months since the Health Department had told the company to stop providing its specialized service.

Family members weren’t the only ones to express frustration Tuesday.

Nicholas Oliver, executive director of the Rhode Island Partnership for Home Care Inc., called Pentec’s departure “a preventable mess.” He faulted both sides, saying the Health Department never called his organization to ask if it knew of another provider that could fill in until the day after the committee held its first hearing on the issue. And he said Pentec failed to look for a replacement, a charge Abens refuted.

“We absolutely worked our tails off to find another home health agency,” he told the committee.

Oliver also criticized the Health Department’s licensing process, saying his organization has provided the names of other agencies that are operating without a license, without any apparent response.

“This committee is only scratching the surface,” he said.

McNamara said he will be meeting with representatives from the Health Department and Pentec in the coming weeks, with the aim of bringing the sides together. He said he also expects legislation next year to revamp the licensing process.

“There shouldn’t be a regulatory iron curtain at the borders of our state,” he said.